Publication Date


Document Type


First Advisor

Iliff, Kathryn (Professor of accountancy)||Eiteman, Dean S.

Degree Name

M.S. (Master of Science)

Legacy Department

Department of Accountancy




Millions of dollars are invested each year by United States corporations in foreign countries. The current trend indicates that United States corporations will continue their investments at an even faster pace. The question of which country in which to invest poses a problem for many business-men. With all things being equal, a business man would pro­bably select the country which offered the best tax advantages. This study was made to determine which of the selected countries offered the greatest tax advantages. The countries included in the study were the United States, the United Kingdom, Italy, Germany, Colombia, Switzerland, Norway, and Canada. The bulk of the data for the study was obtained from tax and trade guides, which were furnished by Arthur Andersen and Company. Certain tax regulations from selected countries were analyzed and applied to a set of hypothetical circumstances. In this hypothetical set of circumstances, the following information was assumed: (1) Sales were $1,000,000. (2) dividend income was $10,000. (3) Beginning Inventory was 0.(4) Purchases were $750,000. (5) Ending Inventory was $350,000. (6) Insurance expense was $10,000. (7) Salary expense was $50,000. (8) Utility expense was $5000. (9) Maintenance expense was $10,000. (10) Legal and accounting expense was $20,000. (11) supplies expense was $1,000, and (12) Transportation expense was $4,000. For purposes of calculat­ing depreciation, it was assumed that buildings cost $1,000,000, office equipment $100,000, and machinery $100,000. It was concluded that the United Kingdom, Italy and Switzerland offered tax advantages superior to all other countries in the study. The year-end tax liabilities charged by each of these three countries were #13,331, $93,200, and $105,598, whereas the United States offered a year-end tax liability of $l6l,103. The United Kingdom offers very liberal depreciation allowances in addition to the regular yearly depreciation. It is a bonus to the taxpayer because after the additional depreciation allowances are calculated, the cost basis of the asset is not reduced. Italy offers a lower year-end tax liability mainly because of a low federal tax rate and a method of computing depreciation which allows a firm to write off an asset with a ten-year life over six years. Switzerland offers a lower year-end tax liability than the United States because its tax rate amounts to only 26%of taxable income. Finally, it was concluded that it would not be advan­tageous, from a tax standpoint, for a United States corpor­ation to establish a branch In Germany, Canada, Colombia, or Norway.


Includes bibliographical references.


vi, 62 pages




Northern Illinois University

Rights Statement

In Copyright

Rights Statement 2

NIU theses are protected by copyright. They may be viewed from Huskie Commons for any purpose, but reproduction or distribution in any format is prohibited without the written permission of the authors.

Media Type